The $200 Billion Empire Built By Beavers

Hello! This is Deep Pockets #32.

Last week, we talked about Burt Shavitz, a clever hippy who figured out that as long as he owned a colony of bees and lived simply off the honey they generated, he would never need a job. As you hopefully recall, Burt reluctantly turned an extremely modest roadside honey business into the personal care empire, Burt’s Bees, which Clorox eventually acquired for nearly $1 billion (none of which went to him).

Today, we are going to talk about another enterprising entrepreneur who figured out how to make money off a natural resource. But instead of bees… BEAVERS.

And as crazy as it sounds, that initial Beaver fortune allowed this entrepreneur to become America’s first millionaire and the richest person in the world BY A LONG SHOT.

Deep Dive: A Real Estate Empire Built On Beaver Furs

John Jakob Astor was born in Germany in 1763 in a town called Walldorf.

When he was 16, John Jakob moved to England to learn how to make pianos and flutes at his uncle’s factory. In England, he anglicized his middle name from “Jakob” to “Jacob.”

In September 1783, the United States and England signed the Treaty of Paris, ending the Revolutionary War. Two months later, 20-year-old John Jacob boarded a ship bound for Baltimore, Maryland, to seek his fortune in this new nation. Other than the clothes on his back, he brought with him seven flutes that he intended to sell upon arrival to get on his feet.

Soon after arriving in Baltimore, he rented a room from a widow named Sarah Cox Todd. Sarah had a daughter named… Sarah Cox Todd. John Jacob instantly took a liking to the younger Sara Cox Todd. They married in 1785. John and Sarah would eventually have eight children and remained together until her death in 1842.

John Jacob’s initial goal upon arriving in the US was to make his way up to New York, where his brother ran a butcher shop.

At some point in those early years, John became enthralled by the fur trade. Where and when he was introduced the the fur trade is debatable. One biography I read claims he learned of the fur trade from a passenger on his trip across the Atlantic. Another says he learned of the fur trade from someone he met in Baltimore. Yet another claims he came upon the fur trade working at the butcher shop in New York.

Either way.

He did briefly work at his brother’s butcher shop. This job certainly would have taught him how to purchase raw animal hides from Native Americans, prepare them, and ship them back to England, where they were sold for a nice profit.

By 1786, he had left the brother’s butcher business and had established his own shop in New York to sell flutes and furs.

He made the flutes by hand in the back of his shop and hunted the furs on his own.

To acquire furs, he traveled to Mackinaw in modern-day Michigan, hunted and killed beavers, and then also personally transported the goods by ship back to London, where they were sold.

Due to some lingering trade issues that the Treaty of Paris didn’t solve, it wasn’t yet legal to export commercial goods between the US and England, so he had to classify the furs as his personal luggage. That’s why he had to personally accompany the goods back to England. It was an arduous and tedious, hands-on endeavor.

The Jay Treaty

John Jacob’s fur business benefited enormously from a treaty signed in 1794 between the US and England called the “Jay Treaty.”

The brainchild of the US Treasury Secretary Alexander Hamilton (who will make another cameo in our story in a minute), the Jay Treaty sewed up a bunch of lingering issues that had not been finalized with the Treaty of Paris a decade earlier. The treaty offered two major benefits to exporters like John Jacob:

1. England agreed to remove its troops from Canada (where he was sourcing most of his furs)

2. The treaty established the right to export commercial goods between the US and England.

From this point on, John Jacob was free to acquire furs in Canada at scale, import them to his shop in New York, and ship them across the Atlantic as merchant cargo without him actually having to make the trip.

It should be noted that according to many tellings of John Jacob Astor’s early beaver trading years, he employed several less-than-ethical strategies for buying furs very inexpensively from Native Americans. One of his most infamous strategies was to get his Native American trading partners extremely drunk before negotiating. Not accustomed to alcohol, the Native Americans would let their goods go for practically nothing before they knew what had happened.

America’s First Millionaire

In the first year after the Jay Treaty was signed, Astor shipped over 100,000 beaver furs from Montreal to New York to England.

By 1800, he had amassed a net worth of $250,000, the modern equivalent of $230 million. He owned a ship, employed dozens of agents to acquire furs, and was the largest fur trader in the United States.

When his personal fortune surpassed $1 million, John Jacob Astor became the very first millionaire in American history.

By the Way: Why Beaver Furs?

Beaver fur has a unique structure that makes it ideal for “felting.” Felting is a process where fibers are interlocked and compressed to create a strong, durable, weather-resistant fabric. In England, the primary output of the furs was to create fashionable men’s hats. What you might call a “top hat” today:

The American Fur Company

In 1808, Astor formed the American Fur Company. And as America expanded west, so did the American Fur Company.

Up to this point, his east coast business consisted of collecting furs in Montreal, shipping them down the coast to New York, then off to England.

For a West Coast base of operations, he chose a tiny undeveloped spot in Oregon, where the Pacific Ocean meets the Columbia River. He Christened the town “Astoria.”

Astoria still stands as the oldest city in Oregon.

The Columbia River snakes its way 1,200 miles from the Oregon coast up into Canada. In his vision, furs and other goods would be transported by land from eastern Canada to Astoria, then loaded onto ships bound for China.

Astor invested $1 million of his own money, the modern equivalent of a billion dollars, to make this trading dream come true. Unfortunately, his plans were totally derailed by the outbreak of the War of 1812, which quickly saw all of his Oregon assets either seized by British troops or sold to Canadian rivals.

But there was an upside to the war.

During the war, which lasted from 1812 to 1815, Astor loaned the US government enormous sums of money through the purchase of bonds. At various points, the bonds dropped enormously in value. Astor never sold. In fact, whenever other investors lost their nerve, he was waiting in the wings, ready to buy at any price.

He doubled down again and again, and when the war concluded, a grateful nation repaid Astor a fortune. More importantly, though, the government threw in a kicker…

With a little behind-the-scenes lobbying from Astor, in 1816, US Congress passed a law that barred non-US citizens from operating in the fur business. This law instantly put his Canadian, French, and British fur trading rivals, who were operating in the US, out of business. After buying up the most valuable foreign-owned enterprises for practically nothing and letting others go under, Astor was sitting on a defacto monopoly on the fur trade in the United States.

Real Estate Empire

Though it made him America’s first millionaire, John Jacob Astor grew tired of the fur trade. Or perhaps more accurately, over time, he became much more interested in a side business: Real estate. Specifically, real estate in a region of New York called…

Manhattan Island

By the 1830s, the American Fur Company was the largest business in America. In 1834, Astor sold the entire company so he could devote himself and his wealth exclusively to buying real estate on Manhattan Island.

Astor had actually been buying plots of land in Manhattan going back to the early 1800s. For example, in 1803, he bought a 70-acre farm running west of Broadway to the Hudson River between 42nd and 46th streets. On the farm, he built a private home he dubbed “Astor Mansion at Hellgate.”

A year later, Astor made what was arguably his most important and valuable purchase, thanks to some unfortunate circumstances that his neighbor ran into.

Pop quiz:

Who shot Alexander Hamilton in that famous duel?

As you may recall from one of the most famous commercials of the 1990s, the answer is...

.

.

.

.

.

Aaron Burr

Aaron Burr served as the third Vice President of the United States, under Thomas Jefferson, from 1801 to 1805.

On July 12, 1804, ***he was still actively serving as Vice President*** Aaron Burr shot and killed his political rival, Alexander Hamilton, in a duel.

The duel was the culmination of a long-running political rivalry, but the immediate cause was a series of anonymous letters published during the 1804 New York gubernatorial election, which Burr believed were authored by Hamilton and attacked his character. Burr demanded an explanation from Hamilton, who refused to apologize or retract his statements. This led to a challenge to a duel, which was accepted by both men.  

Dueling was not legal, and even if they had both agreed to the terms, in the wake of the killing, Burr was charged with multiple crimes, including murder. He temporarily fled to South Carolina, where he hunkered down with his daughter. When indictments were dropped in New York and New Jersey (the shooting took place in New Jersey, but Hamilton died in New York), the now-disgraced Burr returned to Washington, D.C., where he served out the remainder of his VP term. When his term was up in 1805, Burr was ostracized from society and spent the rest of his life in various forms of exile.

What does all of this have to do with John Jacob Astor?

In the immediate wake of the shooting, Burr knew his days in New York were over. So he asked his next-door neighbor, John Jacob Astor if he was interested in buying a property he owned.

Astor said yes.

The property Burr sold… for pennies on the dollar… consisted of modern-day Greenwich Village. Not some of Greenwich Village. All of it. Roughly 200 acres.

Once he had a taste for Manhattan real estate, Astor became addicted. He bought land indiscriminately, knowing that any square foot of property would drastically increase in value as Manhattan became more populated.

During the Panic of 1837 (a major depression that lasted into the mid-1840s), Astor bought countless properties from overextended farmers and foreclosed landowners. He owned vast tenements in the East Village and huge tracts of waterfront land. He built gardens, hotels and the grandest theater in the city, Park Theater, which he also rebuilt from scratch after a fire.

It should be noted that many of the buildings Astor owned were tenement slums that were operated by brutal slumlords. The buildings were especially rundown thanks to the way in which Astor leased his land. Astor would typically lease land to a developer for 20 years. When the 20 years were up, the property, including the building, would revert to Astor. Therefore, a developer would build a tenement and pack residents in to maximize his income. And since they had to give up the building after 20 years, the developer had no incentive to improve or upkeep the conditions. If a fire burned down a building, which happened several times, the developer would be responsible for rebuilding, and the lease terms would not change. It created some fairly disgusting living circumstances.

Astor was also quite miserly when it came to collecting rent. Absolutely no circumstance would convince him to grant an extension on a tenant’s rent.

The Richest Person in the World

According to legend, on his deathbed in 1848, Astor’s final words were:

“Could I begin life all over again, knowing what I do now, and had money to invest, I would buy every foot of Manhattan Island.”

Having already comfortably held the title of richest person in America for most of his adult life, John Jacob Astor came out of the Panic of 1837 as the richest person in the world BY FAR.

In 1846, entrepreneur Moses Yale Beach, founder of the Associated Press and inventor of print syndication, published a directory of the richest people in America (can you imagine someone publishing a directory of wealthy people?? Gross!!).

Moses called his directory “The Wealth and Pedigree of Wealthy Citizens of New York City” (maybe “New Yorkers Net Worth” was taken)…

Moses actually included himself in the directory, with a net worth of $300,000, which is the same as around $3.5 billion today. There were only 14 millionaires in America according to this directory.

The second-richest person in America, according to this directory, with a net worth of $1.2 million, was Cornelius Vanderbilt (Anderson Cooper’s great-great-great grandfather).

John Jacob Astor was #1, with a net worth of… $25 million. 

To understand the modern equivalent of $25 million in 1846, consider the following:

Astor’s fortune was equal to around 1% of US GDP in 1846. US GDP in 2024 was around $29 trillion. Being worth 1% of US GDP today would mean you are worth around $290 billion. In other words, after adjusting for inflation and accounting for relative share of GDP, John Jacob Astor’s 1846 fortune would make him one of the three richest people in the world TODAY.

For most of the 170-ish years between 1850 and 2020 (before the rise of today’s mega-billionaires), John Jacob Astor was considered roughly the third richest person in American history behind only John D. Rockefeller and Cornelius Vanderbilt (whose fortunes dramatically increased in the 30 years he lived after Astor’s death). When CelebrityNetWorth.com compiled a list of the richest humans of all time (inflation-adjusted), John Jacob Astor ranked #14. For that list we calculated his relative net worth at around $120 billion. If we had used $290 billion, he would have ranked #4.

Legacy

John Jacob Astor died on March 29, 1848, at the age of 84. In his will, he bequeathed $400,000 to build the Astor Library in New York City. The Astor Library was later consolidated to form the New York Public Library.

You basically can’t walk two blocks in New York without seeing some version of the name “Astor” today.

In the late 1830s, a developer had a clever rebranding idea for an area in Queens, NY, called “Hallet’s Cove.” The developer wanted to turn the area into a new neighborhood for New York’s wealthy citizens. To attract wealthy New Yorkers, he decided to rename the area in honor of New York’s richest resident, John Jacob Astor. He also hoped that naming the area in his honor would inspire John Jacob to buy a property there. That is how Hallet’s Cove area in Queens was rebranded as…

Astoria

Today, 100,000 people call Astoria, Queens, home. Unfortunately, though, the rebranding gimmick didn’t work. John Jacob Astor never set foot in Astoria.

There are dozens of monuments, buildings, and parks that carry the Astor name in Manhattan today, perhaps most notably, Astor Place.

The Astor Place subway stop is decorated with subtle references to John Jacob Astor. The walls of the station are decorated with plaques of beavers:

John Jacob Astor placed the bulk of his fortune into generation-skipping trusts. These trusts allowed the fortune to survive mostly intact for the next 150+ years of Astor descendants.

One of the most famous modern Astor descendants was Brooke Astor. Brooke married into the Astor family when she wed William Vincent Astor in 1953. It was the third marriage for both. They only ended up being married for six years because Vincent died of a heart attack in 1959.

Brooke Astor died in 2007. At the time of her death, her net worth was $192 million.

That’s a $192 million fortune thanks to a fortune created 160 years earlier by the great-great-grandfather of the husband she was married to six decades prior.

Waldorf Astoria

Since John Jacob Astor was born in “Walldorf” Germany, you may be wondering if he is connected to the iconic Waldorf Astoria Hotel in NYC. He is! And the connection is a great story… that we’ll tell in next week’s Deep Pockets 😀 

FINAL WORD

On the next edition of “Deep Pockets,” we’ll tell you the amazing story of how two rival Astor cousins conspired against each other in a fit of mutual hatred to accidentally create the iconic Waldorf Astoria Hotel.

Thanks for reading! Deep Pockets is brand new, and I appreciate you being part of it. I want it to be the best newsletter you’ve ever read.

So, hit Reply and let me know if there’s anything you like, hate, or otherwise just want to say. Thanks!